sold your business for millions...

Congratulations, you have just sold your business for a large capital amount, won the lottery or Inherited a large estate, but the sum involved is more than £5 million. You have paid the taxes due (don’t worry we may be able to legally claim some of that money back) and the question is now ‘how do I secure mine and my family’s future’. 

A large sum of money is very daunting, if you have been a business owner you have been used to dealing with large sums of money on a regular basis. But all of a sudden, your whole financial future depends upon the decisions you now make. As a business owner you will probably be surrounded by professional advisers such as accountants, lawyers and even a financial adviser, so the likelihood is that you will turn to these individuals in the first instance, but you are now asking ‘do they have the skill and knowledge to manage and advise me on my capital’. 

A ‘family wealth office’ can have one client or several very high net worth clients. These individuals or families ‘employ’ by appointing a professional advisor to advise and manage their capital. 

By definition these high net worth clients are deemed professional and non-retail clients and they forgo their rights to the financial services compensation scheme (FSCS). The reason that they do this is primarily so that they can make full use of tax structures on and off shore, and access non-mainstream assets. 

Depending upon the clients remit and experience no investment vehicle is off the radar, but this is not always advisable. 

The best investors in the world are said to be the Endowment funds of the likes of Harvard and Yale universities, etc. They consistently achieve above inflation returns on their ‘portfolios’ due to their ability to invest ‘patiently’ for the long term. As a broad statement they invest a large portion of their capital in ‘Alternative’ assets which can mean ‘anything’ but generally could be termed; private equity or venture capital. 

The advantage to an investor is that if you put a portion of your capital into a private equity (small venture) and it is successful your returns can be multiplied many times over, the negative point is that you can lose the lot! 

This is why access to a group of suitable professionals is prudent as they can assess the risk and return parameters that you are prepared to take or should take, typically based on income and lifestyle needs and the time that the monies would be invested. They will construct a strategy to meet a said objective, also building in the needs for children (such as schooling, future homes etc) and grandchildren, to have a multi generation investment and tax strategy.

Once you have the plan established the input of tax planning accountants are brought in to the plan along with solicitors to build the legal frame works, such as trusts and special purpose vehicles. 

Once the tax structures have been established to minimise tax and cash flows (incomes) are known, then the investment of capital can be implemented, segmenting the capital to target specific goals/objectives and then asset allocation of this capital to investments targeting the required returns/yields. 

The above is a broad example of what could be achieved, but the most important thing to do is to appoint an adviser who understands how to invest capital and fully understands your requirements. Do not expect to achieve this at one meeting, it could even take months and years before the first investment is undertaken, particularly if your investment experiences are limited. 

We here at SM & Associates do offer bespoke planning for ultra-high net worth individuals, do please call us if we can be of assistance.